Buying a home together is an exciting milestone, but for unmarried homebuyers it’s wise to plan ahead and protect your investment in case of a future split. Fortunately, there are ways to clearly define ownership and decide what should happen if you separate and the property is sold. We’ve teamed up with mortgage experts Meet Margo to highlight the key legal and financial considerations.
When buying a home together, choosing the right type of ownership is just as important as finding the perfect place. There are different ways to own property together, each with legal and financial implications. Here’s a quick overview of the most common options in the UK:
Joint Tenancy
In a Joint Tenancy, both partners own the entirety of the property, and are presumed to have 50:50 share, regardless of their financial contributions. One significant benefit is the “right of survivorship,” meaning that if one partner passes away, their share automatically goes to the surviving owner(s).
Best for: Couples who want a straightforward arrangement and ensure a smooth transfer of ownership if one partner dies.
Tenants in Common
Tenants in Common allow for partners to have a distinct share in the property, meaning one partner could own 70% while the other owns 30%, or each to own 50%, for instance. If one partner passes away, their share will be passed on according to their Will, rather than automatically going to the other partner.
Best for: Couples who prefer a flexible ownership structure that reflects their financial contributions.
Sole Ownership
Sole Ownership means that one person holds the entire title to the property. In this case, the property will go to whoever the owner names in their Will when they pass away.
Best for: Individuals who prefer to maintain complete control over the property.
Speak to a mortgage expert
When buying a home with a partner different types of ownership can affect your borrowing power.
Here are some key points to consider:
Joint Mortgages
If you and your partner apply for a joint mortgage, lenders will assess both your income and credit histories. This can increase your borrowing potential but also means both parties are responsible for the mortgage payments.
Individual Mortgages
If one partner takes out a mortgage in their name while the other is a co-owner, it’s known as a Joint Borrower Sole Proprietor (JBSP) arrangement. These types of mortgage are rare, but can be beneficial if one partner has a stronger credit score or income but requires careful planning regarding financial contributions and ownership rights.
Protecting your debt
It’s wise to consider putting insurance in play to cover mortgage payments if one partner can no longer work due to illness or accident. This provides peace of mind and financial security, particularly in uncertain times.
Talk to a Mortgage Advisor
A good mortgage advisor can help you find the right mortgage for your needs. At Meet Margo, we take the time to review your finances and match you with the lender that suits you best. And the best part? We don’t charge a fee—like all advisors, we’re paid by the lender once your mortgage is finalised.
Types of legal agreements for unmarried homebuyers
When you buy a home with your partner and you aren’t yet married, there are legal documents you can put in place to help clarify ownership and protect both of your interests. Here are two common options to think about:
Declaration of Trust
A Declaration of Trust outlines each owner’s financial contribution and how any profits from a sale will be split. This legal agreement is useful when contributions differ, as it protects everyone’s investment.
Best for: Couples buying together, particularly when one partner is contributing more financially such as the deposit.
Cohabitation Agreement
A Cohabitation Agreement clarifies who owns what, how finances are managed, and what happens to shared assets if the relationship ends. This agreement should be updated whenever life changes, like having a child.
Best for: Unmarried homebuyers who want clarity about their rights and responsibilities.
A Declaration of Trust is legally binding, but whilst a Cohabitation Agreement is not, the courts increasingly recognise their intention and give them decisive weight if prepared in the right way.
Which legal option is right for me?
The right choice depends on your relationship, financial contributions, and long-term goals. To ensure you make an informed decision, it’s best to chat to your partner about your options and seek expert advice. A professional can guide you through the options and help you find the one that best aligns with your situation and future plans.
Speak to a Legal Expert
Before making any decisions about homeownership agreements, it’s a good idea to speak to a legal expert.
“Unmarried homeowners often face extra challenges because UK law doesn’t automatically safeguard each partner’s financial contributions. Without clear legal agreements, the division of assets or responsibilities can become complicated if the relationship ends.
It’s crucial to seek legal advice early to ensure your contributions are fairly acknowledged from the outset and to establish a plan for what happens to the property if circumstances change. Taking these steps can provide both partners with the security and peace of mind they need when making such a significant financial commitment.” Judit Kerese, Family Lawyer at Stowe Family Law.
At Stowe we can offer unmarried homebuyers tailored advice on the different types of ownership options available and help you draft any necessary documents to ensure everything is fair and recorded legally.
The Bottom Line: Plan Ahead
Planning ahead can spare you unnecessary stress and uncertainty if things don’t go as planned. Claire Towe, co-founder of Meet Margo, said “No one plans for things to go wrong, but the future is unpredictable. We’ve seen the impact of not having proper agreements in place. Many homeowners come to us with stories of regret and uncertainty when life throws them curveballs.
“This isn’t about benefiting one person over the other just because of differences in income or contributions. It’s about making sure both of you are protected as homeowners. By considering these options now, you’re ensuring that your future self will be proud of the decisions you’ve made, even if, hopefully, you never have to rely on them.”
Tips on discussing home-buying options with your partner
- Be Honest and Open: Let your partner know this is about protecting both of you, not just yourself.
- Frame it Positively: Highlight the security and peace of mind these options offer both of you.
- Educate Together: To understand your needs and how they benefit you both.
- Seek Expert Advice: To clarify any doubts and know what’s right for your situation.
For fee-free mortgage and protection advice, contact Meet Margo.
Your home may be repossessed if you do not keep up with mortgage repayments.
Useful links
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